Truworths an improved set or financials

Truworths an improved set or financials
Published: 01 October 2013
Retailer, Truworths published a significantly improved set of financials showing a 10% growth in revenue to $25.4m. The number of accounts increased by 8.2% over the comparative period to 76,500 accounts, with 82.4% of these accounts being active.

Retail trading profit grew by 11.3% to $12.4m. The group reported a net finance income of $0.2m compared to a net cost of the same magnitude in the prior period.

Profit for the period went up 83% to $1.2m and the company declared a dividend of USc 0.078 per share to shareholders registered on Friday 18 October 2013. The register will be closed from 19 October 2013 to 21 October 2013 both dates inclusive. The dividend yield is 2.6% and the cover is 4.1x. Shareholders can elect to receive scrip in lieu of cash.

Cash generation improved during the period with $0.3m in operating cash inflow compared to $0.6m cash outflow in the prior period. Capex at $2.3m was deployed in the development of 5 new stores as well as refurbishments and procurement of motor vehicles. The group increased borrowings during the period to fund the opening of new stores as well as the refurbishments of other stores.

On the balance sheet accounts receivables increased from $7m to $7.7m due to an increase in accounts opened during the period. Truworths reduced short term debt and replaced it with long term debt amounting to $2.7m.

The cash flow position of Truworths improved considerably after the write down of some non performing accounts last year. Although the percentage of active accounts declined from 87.1% to 82.4% the figure compares favourably with those of competition at 85%. The company continues to maintain a strict credit policy as highlighted by the increase in provisions for doubtful debts as percentage of gross trade receivables from 4.5% to 5.5%.

The clothing retail sector is very competitive given an influx of cheap imports from China and other informal channels. This coupled with the tight liquidity situation will depress the retail industry in the short term. Caution on credit sales is a prudent concept that Truworths must continue to explore until the operating environment improves. 
- businessdaily
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